Discriminatory investment condition

[Guest jim williams]

We administer a 401k plan and currently offer Merrill Lynch mutual funds as an investment option to all participants. All participants who currently maintain the Merrill Lynch self-directed accounts are HCE. Would it be considered discriminatory under Reg. 1.401(a)(4) if we were to add a condition that as of a certain date only participants who currently maintain Merrill Lynch accounts will be permitted to make future contributions to these accounts?

[mming]

I think it would be considered discriminatory for the simple reason that after the cutoff date you would have HCEs investing in something that's not available to NHCEs. Even if NHCEs invested in the ML accounts before the cutoff date the same problem would exist. Generally, you should give everyone access to everything all the time.